LG Electronics has teamed up with Danish luxury audio and TV maker Bang & Olufsen to develop new organic light-emitting diode TVs, with the first set to be launched next year.

The Korean tech giant said Sunday that the strategic partnership will take effect from next year and last for five years.

The deal comes at a crucial time for both companies which are struggling to gain traction amid sluggish sales. 

LG is making an all-out effort to elevate OLED TV sales.

The company has poured resources into the production of OLED TVs, while its rivals such as Samsung and Panasonics still stick to liquid-crystal display TVs for better profits.

Compared to LCD, OLED boasts perfect blackness and color contrast but its tricky production raises production costs and TV prices.

Partnering with B&O, the maker of $8,000-plus TVs, LG is expected to further beef up the premium marketing. The company aims to triple OLED TV sales to some 940,000 units this year.

B&O also hopes to cut costs by outsourcing its money-losing TV production. Currently, the company produces some 30,000 TVs annually, while LG’s production exceeds 40 million units.

The company said the LG deal will lead to annual savings of 150 million kroner ($23 million) to 200 million kroner when fully implemented in the next three years.

Amid speculations that B&O is seeking a new owner after years of profit losses, its share price soared about 10 percent Friday following the partnership announcement.

This is not the first time for the two companies to join hands.

LG’s latest flagship smartphone G5, a modular phone that has an accessory slot to allow users to upgrade camera and sound functions, has a hi-fi sound system module that is produced by B&O.

By Lee Ji-yoon (jylee@heraldcorp.com)